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Beijing, Seoul agree to directly trade currencies

Now it is official, South Korea will directly exchange currency into Yuan bypassing the USD. They are just one more of a ever growing list of nations bypassing the USD.

China and South Korea plan to directly trade their currencies, marking a step forward in the renminbi's internationalization.

The announcement came in a joint statement from the Chinese and South Korean governments during President Xi Jinping's visit to South Korea on Thursday.

An RMB clearing facility is expected to be set up in Seoul to further boost yuan trading in the country, where deposits of the Chinese currency have surged this year.

The statement didn't specify when the two plans will be implemented.

An agreement will mark the success of months of negotiations between the two countries to provide a marketplace where the yuan and the South Korean won can be transacted directly without relying on the US dollar.

According to the statement, South Korea will also be given an 80 billion yuan ($12.9 billion) quota under China's Qualified Foreign Institutional Investor system, which allows foreign fund managers to invest in Chinese financial markets using the yuan.

As of May, South Korea had $11.3 billion worth of yuan deposits, up by 70 percent from the start of the year, making the yuan the second-largest foreign currency deposit in the country after the US dollar.